Money to be made even by low-budget investors

If you are venturing onto Wall Street for the first time, you probably don't have much money to invest. Consider that a blessing.

While the stakes are still small, you can get a taste for market swings, figure out your best investment strategy and make the inevitable mistakes. You will also avoid the risk of investing a big hunk of money just before a market drop.But where's the best place to invest those first few dollars? Here are some low-budget options:

Low-minimum mutual funds

Many funds expect investors to ante up $1,000 or $3,000 to open an account. But a lot of them will waive or reduce their minimum if you sign up for an automatic investment plan, where $50 or $100 is deducted from your bank account or paycheck every month and deposited directly into a fund.

Often, you also can get into funds for less than the usual minimum if you open an individual retirement account or set up a cus-to-dial account for a child.

To their credit, many broker-sold funds have lower minimums than their no-load counterparts. That's good news, if you need a broker's advice. But if you are happy to make your own investment decisions, I would identify some well-run no-load funds and then find a low-rent way to wriggle in.

Dividend reinvestment plans

With the dividend reinvestment plans at most companies, you first buy a single share and then use that share to get enrolled. Thereafter, all your dividends are automatically invested in additional shares. You also can add to your account by sending in optional cash investments of as little as $25 or $50.

But how do you acquire that first share? You could use a discount brokerage firm, which might snag $20 or $30 for its services. Alternatively, consider the National Association of Investors Corp. in Madison Heights, Mich.

NAIC, which charges $39 a year for an individual membership, offers two programs. With the older program, NAIC helps members buy a single share in any of 150 companies, and then it uses that share to get members enrolled in a company's plan.

Participating firms include Dow Chemical, Intel, Kellogg, Motorola, Wendy's International and Whirlpool. For each plan, there is a $7 administrative fee when you enroll.

NAIC recently introduced a newer program that allows members to invest in 200 companies. With this program, NAIC doesn't enroll members in each company's plan. Instead, NAIC does all the record keeping and dividend reinvestment itself.

The service allows members to get all of their stocks on a single statement, to invest in companies that don't pay dividends and to avoid the fees that many plans now charge. But the new NAIC program, which is more expensive, makes most sense if you intend to invest in a large number of stocks on a regular basis.

Finally, check out Temper of the Times Communications, in Mamaroneck, N.Y., which will help investors purchase a single share of approximately 900 companies and then get them signed up for each company's plan.

To use Temper's service, you either have to pay $45 a year or subscribe to the Moneypaper, an investment newsletter affiliated with Temper. Temper charges a $15 administrative fee for each stock bought.

No-load stocks

Over the past three years, about 300 companies have introduced so-called no-load stock programs, which allow folks to set up dividend reinvestment plans even if they don't currently own shares. Depending on the company, you have to pony up an initial investment of $50 to $1,000.

Unfortunately, with the advent of no-load stock programs has come the proliferation of fees, including enrollment fees, purchase fees, annual account fees and fees for dividend reinvestment.

"You might want to start with three or four stocks and then build it up to between six and 10 over a couple of years," he suggests.

Treasury Direct

If you are on a tight budget and you want to buy individual bonds, consider Treasury Direct, the government program for selling Treasury bonds directly to investors.

To get information, contact your local Federal Reserve bank or branch or call the Bureau of the Public Debt in Washington, D.C.

For the truly cash strapped, Treasury securities with an original maturity of five years or more are particularly appealing, because the minimum is just $1,000. When interest is paid, the government credits your bank account. If necessary, Treasury Direct also will sell your bonds before maturity, for a $34 fee.